##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1937
 For the transition period from   to
 Commission File No. 001-16101
 BANCORP RHODE ISLAND, INC.
  Rhode Island
    
    05-0509802(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    Accelerated filer þ
    Non-accelerated filer o
    Smaller reporting company o
 o þ
  Common Stock  Par Value $0.01
    
    4,600,744 shares(class)
    
    (outstanding)




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##### 



BANCORP RHODE ISLAND, INC.
Quarterly Report on Form 10-Q
Table of Contents
 Description
    
    Page NumberCover Page
    
    
    1Table of Contents
    
    
    2Part I  Financial InformationItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Condensed Notes to Consolidated Financial Statements
    
    
    7-23Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24-47Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    48Item 4. Controls and Procedures
    
    
    49Part II  Other InformationItem 1. Legal Proceedings
    
    
    50Item 1A. Risk Factors
    
    
    50Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 3. Defaults Upon Senior Securities
    
    
    50Item 4. Submission of Matters to a Vote of Security Holders
    
    
    50Item 5. Other Information
    
    
    50Item 6. Exhibits
    
    
    51Signature Page
    
    
    52Exhibit 10.6(b)Exhibit 12.1Exhibit 12.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Special Note Regarding Forward Looking Statements
    2




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Balance Sheets (unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)ASSETS:Cash and due from banks
    
    $
    19,020
    
    
    $
    54,344Overnight investments
    
    
    523
    
    
    
    1,113Total cash and cash equivalents
    
    
    19,543
    
    
    
    55,457Available for sale securities (amortized cost of $361,158 and
$325,767, respectively)
    
    
    365,706
    
    
    
    326,406Stock in Federal Home Loan Bank of Boston
    
    
    16,274
    
    
    
    15,671Loans and leases receivable:Commercial loans and leases
    
    
    724,421
    
    
    
    658,422Residential mortgage loans
    
    
    182,303
    
    
    
    212,665Consumer and other loans
    
    
    209,903
    
    
    
    206,655Total loans and leases receivable
    
    
    1,116,627
    
    
    
    1,077,742Allowance for loan and lease losses
    
    
    (16,537
    )
    
    
    (14,664
    )Net loans and leases receivable
    
    
    1,100,090
    
    
    
    1,063,078Premises and equipment, net
    
    
    12,518
    
    
    
    12,641Goodwill, net
    
    
    12,051
    
    
    
    12,019Accrued interest receivable
    
    
    4,826
    
    
    
    5,240Investment in bank-owned life insurance
    
    
    29,672
    
    
    
    28,765Prepaid expenses and other assets
    
    
    9,200
    
    
    
    9,697Total assets
    
    $
    1,569,880
    
    
    $
    1,528,974LIABILITIES:Deposits:Demand deposit accounts
    
    $
    206,534
    
    
    $
    176,495NOW accounts
    
    
    62,333
    
    
    
    56,703Money market accounts
    
    
    50,380
    
    
    
    4,445Savings accounts
    
    
    365,857
    
    
    
    381,106Certificate of deposit accounts
    
    
    406,827
    
    
    
    423,443Total deposits
    
    
    1,091,931
    
    
    
    1,042,192Overnight and short-term borrowings
    
    
    39,031
    
    
    
    57,676Wholesale repurchase agreements
    
    
    20,000
    
    
    
    10,000Federal Home Loan Bank of Boston borrowings
    
    
    267,647
    
    
    
    238,936Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    13,403Other liabilities
    
    
    15,392
    
    
    
    17,162Total liabilities
    
    
    1,447,404
    
    
    
    1,379,369SHAREHOLDERS EQUITY:Preferred stock, par value $0.01 per share, authorized 1,000,000
shares, liquidation preference $1,000 per share:Issued and outstanding: 0 and 30,000 shares, respectively
    
    
    
    
    
    
    28,595Common stock, par value $0.01 per share, authorized 11,000,000 shares:Issued: 4,965,494 and 4,926,920 shares, respectively
    
    
    50
    
    
    
    49Additional paid-in capital
    
    
    72,600
    
    
    
    73,323Treasury stock, at cost: 364,750 and 352,250 shares, respectively
    
    
    (12,309
    )
    
    
    (12,055
    )Retained earnings
    
    
    59,179
    
    
    
    59,278Accumulated other comprehensive income, net
    
    
    2,956
    
    
    
    415Total shareholders equity
    
    
    122,476
    
    
    
    149,605Total liabilities and shareholders equity
    
    $
    1,569,880
    
    
    $
    1,528,974
 See accompanying notes to unaudited consolidated financial statements
  3




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Operations (unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share data)Interest and dividend income:Overnight investments
    
    $
    1
    
    
    $
    6
    
    
    $
    10
    
    
    $
    261Mortgage-backed securities
    
    
    3,336
    
    
    
    3,570
    
    
    
    10,099
    
    
    
    10,257Investment securities
    
    
    540
    
    
    
    691
    
    
    
    1,527
    
    
    
    2,151Federal Home Loan Bank of Boston stock dividends
    
    
    
    
    
    
    119
    
    
    
    
    
    
    
    512Loans and leases
    
    
    15,123
    
    
    
    15,751
    
    
    
    44,716
    
    
    
    47,469Total interest and dividend income
    
    
    19,000
    
    
    
    20,137
    
    
    
    56,352
    
    
    
    60,650Interest expense:Deposits
    
    
    3,308
    
    
    
    4,773
    
    
    
    12,026
    
    
    
    16,796Overnight and short-term borrowings
    
    
    19
    
    
    
    209
    
    
    
    67
    
    
    
    853Wholesale repurchase agreements
    
    
    141
    
    
    
    136
    
    
    
    408
    
    
    
    404Federal Home Loan Bank of Boston borrowings
    
    
    2,691
    
    
    
    2,864
    
    
    
    7,966
    
    
    
    8,234Subordinated deferrable interest debentures
    
    
    175
    
    
    
    234
    
    
    
    564
    
    
    
    710Total interest expense
    
    
    6,334
    
    
    
    8,216
    
    
    
    21,031
    
    
    
    26,997Net interest income
    
    
    12,666
    
    
    
    11,921
    
    
    
    35,321
    
    
    
    33,653Provision for loan and lease losses
    
    
    1,900
    
    
    
    1,515
    
    
    
    6,110
    
    
    
    2,770Net interest income after provision for loan and
lease losses
    
    
    10,766
    
    
    
    10,406
    
    
    
    29,211
    
    
    
    30,883Noninterest income:Total other-than-temporary impairment losses on
available for sale securities
    
    
    (696
    )
    
    
    (219
    )
    
    
    (696
    )
    
    
    (219
    )Non-credit component of other-than-temporary losses
recognized in other comprehensive income
    
    
    626
    
    
    
    
    
    
    
    626
    
    
    
    Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    (70
    )
    
    
    (219
    )
    
    
    (70
    )
    
    
    (219
    )Service charges on deposit accounts
    
    
    1,396
    
    
    
    1,469
    
    
    
    3,973
    
    
    
    4,352Commissions on nondeposit investment products
    
    
    322
    
    
    
    174
    
    
    
    589
    
    
    
    629Income from bank-owned life insurance
    
    
    313
    
    
    
    266
    
    
    
    906
    
    
    
    783Loan related fees
    
    
    75
    
    
    
    136
    
    
    
    703
    
    
    
    443Net gains on lease sales and commissions on loans
originated for others
    
    
    13
    
    
    
    55
    
    
    
    61
    
    
    
    374Gain on sale of available for sale securities
    
    
    
    
    
    
    168
    
    
    
    61
    
    
    
    410Other income
    
    
    192
    
    
    
    284
    
    
    
    589
    
    
    
    956Total noninterest income
    
    
    2,241
    
    
    
    2,333
    
    
    
    6,812
    
    
    
    7,728Noninterest expense:Salaries and employee benefits
    
    
    5,224
    
    
    
    5,067
    
    
    
    15,303
    
    
    
    15,206Occupancy
    
    
    864
    
    
    
    899
    
    
    
    2,652
    
    
    
    2,628Data processing
    
    
    659
    
    
    
    697
    
    
    
    1,949
    
    
    
    2,124Professional services
    
    
    609
    
    
    
    709
    
    
    
    1,953
    
    
    
    2,198FDIC insurance
    
    
    502
    
    
    
    216
    
    
    
    2,065
    
    
    
    478Marketing
    
    
    327
    
    
    
    367
    
    
    
    974
    
    
    
    1,100Equipment
    
    
    226
    
    
    
    233
    
    
    
    709
    
    
    
    807Loan workout and other real estate owned
    
    
    219
    
    
    
    78
    
    
    
    496
    
    
    
    314Loan servicing
    
    
    174
    
    
    
    185
    
    
    
    522
    
    
    
    503Other expenses
    
    
    1,008
    
    
    
    853
    
    
    
    2,957
    
    
    
    3,018Total noninterest expense
    
    
    9,812
    
    
    
    9,304
    
    
    
    29,580
    
    
    
    28,376Income before income taxes
    
    
    3,195
    
    
    
    3,435
    
    
    
    6,443
    
    
    
    10,235Income tax expense
    
    
    992
    
    
    
    1,111
    
    
    
    2,037
    
    
    
    3,344Net income
    
    
    2,203
    
    
    
    2,324
    
    
    
    4,406
    
    
    
    6,891Preferred stock dividends
    
    
    (142
    )
    
    
    
    
    
    
    (892
    )
    
    
    Prepayment charges and accretion of preferred stock discount
    
    
    (1,282
    )
    
    
    
    
    
    
    (1,405
    )
    
    
    Net income applicable to common shares
    
    $
    779
    
    
    $
    2,324
    
    
    $
    2,109
    
    
    $
    6,891Per share data:Basic earnings per common share
    
    $
    0.17
    
    
    $
    0.51
    
    
    $
    0.46
    
    
    $
    1.51Diluted earnings per common share
    
    $
    0.17
    
    
    $
    0.50
    
    
    $
    0.46
    
    
    $
    1.49Cash dividends declared per common share
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.51
    
    
    $
    0.49Weighted average common shares outstanding  basic
    
    
    4,606
    
    
    
    4,567
    
    
    
    4,599
    
    
    
    4,562Weighted average common shares outstanding  diluted
    
    
    4,634
    
    
    
    4,629
    
    
    
    4,620
    
    
    
    4,633
 See accompanying notes to unaudited consolidated financial statements
  4




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Changes in Shareholders Equity (unaudited)
 AccumulatedOtherCompre-Additional
    
    
    
    
    
    
    
    
    
    
    hensivePreferred
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    IncomeNine months ended September 30,
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    (Loss)
    
    
    Total(In thousands, except per share data)2008Balance at December 31, 2007
    
    $
    
    
    
    $
    49
    
    
    $
    70,123
    
    
    $
    (10,189
    )
    
    $
    53,194
    
    
    $
    (69
    )
    
    $
    113,108Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,891
    
    
    
    
    
    
    
    6,891Other comprehensive income:Unrealized holding losses on
securities available for sale,
net of taxes of $1,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,246
    )
    
    
    (3,246
    )Reclassification adjustment,
net of taxes of $67
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (124
    )
    
    
    (124
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,521Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    555
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    555Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    656Treasury stock acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,866
    )
    
    
    
    
    
    
    
    
    
    
    (1,866
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287Tax benefit from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Dividends on common stock ( $0.49
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,224
    )
    
    
    
    
    
    
    (2,224
    )Balance at September 30, 2008
    
    $
    
    
    
    $
    49
    
    
    $
    71,810
    
    
    $
    (12,055
    )
    
    $
    57,861
    
    
    $
    (3,439
    )
    
    $
    114,2262009Balance at December 31, 2008
    
    $
    28,595
    
    
    $
    49
    
    
    $
    73,323
    
    
    $
    (12,055
    )
    
    $
    59,278
    
    
    $
    415
    
    
    $
    149,605Cumulative effect of a change in
accounting principle, net of taxes of
$(77)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    (137
    )
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,406
    
    
    
    
    
    
    
    4,406Other comprehensive income:Unrealized holding gains on
securities available for
sale, net of taxes of
$(1,682)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,124
    
    
    
    3,124Reclassification adjustment for
net gains included in net
income, net of taxes of $21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (40
    )Non-credit portion OTTI,
net of taxes of $220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (406
    )
    
    
    (406
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,084Exercise of stock options
    
    
    
    
    
    
    1
    
    
    
    438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    439Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Repurchase of warrant
    
    
    
    
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,400
    )Redemption of preferred stock
    
    
    (30,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,000
    )Treasury stock acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )
    
    
    
    
    
    
    
    
    
    
    (254
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80Tax benefit from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81Preferred stock discount accretion
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    Prepayment charge on preferred stock
discount
    
    
    1,282
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,282
    )
    
    
    
    
    
    
    Dividends on preferred stock ($29.73
per preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    (892
    )Dividends on common stock ( $0.51
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,345
    )
    
    
    
    
    
    
    (2,345
    )Balance at September 30, 2009
    
    $
    
    
    
    $
    50
    
    
    $
    72,600
    
    
    $
    (12,309
    )
    
    $
    59,179
    
    
    $
    2,956
    
    
    $
    122,476
 See accompanying notes to unaudited consolidated financial statements
  5




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Cash Flows (unaudited)
 Nine Months EndedSeptember  30,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income
    
    $
    4,406
    
    
    $
    6,891Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation, amortization and accretion, net
    
    
    (4,563
    )
    
    
    (2,111
    )Provision for loan and lease losses
    
    
    6,110
    
    
    
    2,770Income from bank-owned life insurance
    
    
    (906
    )
    
    
    (783
    )Share-based compensation expense
    
    
    80
    
    
    
    287Net gains on lease sales
    
    
    (26
    )
    
    
    (287
    )Gain on sale of available for sale securities
    
    
    (61
    )
    
    
    (410
    )Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    70
    
    
    
    219Gain on sale of other real estate owned
    
    
    (38
    )
    
    
    Proceeds from sales of leases
    
    
    976
    
    
    
    9,538Leases originated for sale
    
    
    (794
    )
    
    
    (5,985
    )Decrease in accrued interest receivable
    
    
    414
    
    
    
    893Decrease (increase) in prepaid expenses and other assets
    
    
    188
    
    
    
    (267
    )Decrease in other liabilities
    
    
    (1,724
    )
    
    
    (2,381
    )Net cash provided by operating activities
    
    
    4,132
    
    
    
    8,374Cash flows from investing activities:Available for sale securities:Purchases
    
    
    (163,639
    )
    
    
    (116,892
    )Maturities and principal repayments
    
    
    126,490
    
    
    
    91,112Proceeds from sales
    
    
    1,880
    
    
    
    22,548Net increase in loans and leases
    
    
    (39,631
    )
    
    
    (24,048
    )Capital expenditures for premises and equipment
    
    
    (965
    )
    
    
    (538
    )Proceeds from sale of other real estate owned
    
    
    988
    
    
    
    Purchase of Federal Home Loan Bank of Boston stock
    
    
    (603
    )
    
    
    Net cash used in investing activities
    
    
    (75,480
    )
    
    
    (27,818
    )Cash flows from financing activities:Net increase in deposits
    
    
    49,739
    
    
    
    7,374Net decrease in overnight and short-term borrowings
    
    
    (8,645
    )
    
    
    (11,019
    )Proceeds from long-term borrowings
    
    
    80,791
    
    
    
    43,400Repayment of long-term borrowings
    
    
    (52,080
    )
    
    
    (25,222
    )Exercise of stock options
    
    
    439
    
    
    
    555Repurchase of warrant
    
    
    (1,400
    )
    
    
    Redemption of preferred stock
    
    
    (30,000
    )
    
    
    Repurchase of common stock
    
    
    (254
    )
    
    
    (1,866
    )Tax benefit from exercise of stock options
    
    
    81
    
    
    
    189Dividends on preferred stock
    
    
    (892
    )
    
    
    Dividends on common stock
    
    
    (2,345
    )
    
    
    (2,224
    )Net cash provided by financing activities
    
    
    35,434
    
    
    
    11,187Net decrease in cash and cash equivalents
    
    
    (35,914
    )
    
    
    (8,257
    )Cash and cash equivalents at beginning of period
    
    
    55,457
    
    
    
    37,562Cash and cash equivalents at end of period
    
    $
    19,543
    
    
    $
    29,305Supplementary Disclosures:Cash paid for interest
    
    $
    21,789
    
    
    $
    29,067Cash paid for income taxes
    
    
    2,404
    
    
    
    3,150Non-cash investing and financing transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    3,084
    
    
    
    (3,370
    )Cumulative effect of a change in accounting principle, net of taxes
    
    
    137
    
    
    
    Contingent share payments related to Macrolease acquisition
    
    
    78
    
    
    
    656Transfer of loans to other real estate owned
    
    
    2,083
    
    
    
    352Treasury stock acquisitions from shares tendered in stock option exercises
    
    
    254
    
    
    
    
 See accompanying notes to unaudited consolidated financial statements
  6




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Notes to Consolidated Financial Statements (unaudited)
 (1) Basis of Presentation
       (2) Earnings Per Share
   7




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##### Table of Contents



(3) Recently Adopted Accounting Pronouncements
 The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No.
162 .
 Business Combinations (Revised 2007) . Business Combinations, Accounting for Costs Associated with Exit or Disposal Activities, Accounting for Contingencies
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities, Note 6  Derivatives.
  8




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##### Table of Contents



Determining Whether
Instruments Granted In Share-Based Payment Transactions Are Participating Securities
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies
 Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly Note 7  Fair Value of Financial Instruments.
 Recognition and Presentation
of Other-Than-Temporary Impairments Note 5  Available for Sale Securities
 Interim Disclosures about Fair
Value of Financial Instruments Note 7  Fair Value of
Financial Instruments
 Subsequent Events
  9




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##### Table of Contents



(4) Recent Accounting Pronouncements
 Accounting for Transfers of Financial Assets, an
amendment of FASB Statement No. 140 Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R)
 (5) Available for Sale Securities
   10




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##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    FairCost (1)
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)At September 30, 2009:GSE obligations
    
    $
    80,957
    
    
    $
    481
    
    
    $
    (43
    )
    
    $
    81,395Trust preferred collateralized debt obligations
    
    
    2,864
    
    
    
    
    
    
    
    (2,379
    )
    
    
    485Collateralized mortgage obligations
    
    
    49,626
    
    
    
    714
    
    
    
    (2,155
    )
    
    
    48,185GSE mortgage-backed securities
    
    
    227,711
    
    
    
    7,953
    
    
    
    (23
    )
    
    
    235,641Total
    
    $
    361,158
    
    
    $
    9,148
    
    
    $
    (4,600
    )
    
    $
    365,706At December 31, 2008:U.S. Treasury obligations
    
    $
    9,990
    
    
    $
    
    
    
    $
    (2
    )
    
    $
    9,988GSE obligations
    
    
    47,131
    
    
    
    256
    
    
    
    
    
    
    
    47,387Corporate debt securities
    
    
    2,001
    
    
    
    
    
    
    
    (14
    )
    
    
    1,987Trust preferred collateralized debt obligations
    
    
    2,735
    
    
    
    
    
    
    
    (1,255
    )
    
    
    1,480Collateralized mortgage obligations
    
    
    62,909
    
    
    
    256
    
    
    
    (2,415
    )
    
    
    60,750GSE mortgage-backed securities
    
    
    201,001
    
    
    
    4,289
    
    
    
    (476
    )
    
    
    204,814Total
    
    $
    325,767
    
    
    $
    4,801
    
    
    $
    (4,162
    )
    
    $
    326,406
 (1)
    
    Amortized cost is net of write-downs as a result of other-than-temporary impairment.  Less than One Year
    
    
    One Year or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)At September 30, 2009:GSE obligations
    
    $
    19,943
    
    
    $
    (43
    )
    
    $
    
    
    
    $
    
    
    
    $
    19,943
    
    
    $
    (43
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    485
    
    
    
    (2,379
    )
    
    
    485
    
    
    
    (2,379
    )Collateralized mortgage obligations
    
    
    9,075
    
    
    
    (210
    )
    
    
    16,397
    
    
    
    (1,945
    )
    
    
    25,472
    
    
    
    (2,155
    )GSE mortgage-backed securities
    
    
    13,668
    
    
    
    (21
    )
    
    
    331
    
    
    
    (2
    )
    
    
    13,999
    
    
    
    (23
    )Total
    
    $
    42,686
    
    
    $
    (274
    )
    
    $
    17,213
    
    
    $
    (4,326
    )
    
    $
    59,899
    
    
    $
    (4,600
    )At December 31, 2008:U.S. Treasury obligations
    
    $
    9,988
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,988
    
    
    $
    (2
    )Corporate debt securities
    
    
    1,987
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    1,987
    
    
    
    (14
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    1,480
    
    
    
    (1,255
    )
    
    
    1,480
    
    
    
    (1,255
    )Collateralized mortgage obligations
    
    
    30,771
    
    
    
    (1,385
    )
    
    
    10,343
    
    
    
    (1,030
    )
    
    
    41,114
    
    
    
    (2,415
    )GSE mortgage-backed securities
    
    
    33,016
    
    
    
    (350
    )
    
    
    2,662
    
    
    
    (126
    )
    
    
    35,678
    
    
    
    (476
    )Total
    
    $
    75,762
    
    
    $
    (1,751
    )
    
    $
    14,485
    
    
    $
    (2,411
    )
    
    $
    90,247
    
    
    $
    (4,162
    )
  11




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##### Table of Contents



After One, But
    
    
    After Five, ButWithin One Year
    
    
    Within Five Years
    
    
    Within Ten Years
    
    
    After Ten YearsAmortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)At September 30, 2009:GSE obligations
    
    $
    
    
    
    $
    
    
    
    $
    75,960
    
    
    $
    76,412
    
    
    $
    4,998
    
    
    $
    4,983
    
    
    $
    
    
    
    $
    Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,864
    
    
    
    485Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,268
    
    
    
    24,850
    
    
    
    24,357
    
    
    
    23,335GSE mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,667
    
    
    
    22,849
    
    
    
    206,045
    
    
    
    212,792Total
    
    $
    
    
    
    $
    
    
    
    $
    75,960
    
    
    $
    76,412
    
    
    $
    51,933
    
    
    $
    52,682
    
    
    $
    233,266
    
    
    $
    236,612At December 31, 2008:U.S. Treasury obligations
    
    $
    9,990
    
    
    $
    9,988
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    GSE obligations
    
    
    5,000
    
    
    
    5,013
    
    
    
    42,131
    
    
    
    42,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate debt securities
    
    
    2,001
    
    
    
    1,987
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,735
    
    
    
    1,480Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,867
    
    
    
    20,408
    
    
    
    42,042
    
    
    
    40,343GSE mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,764
    
    
    
    26,604
    
    
    
    175,237
    
    
    
    178,209Total
    
    $
    16,991
    
    
    $
    16,988
    
    
    $
    42,131
    
    
    $
    42,374
    
    
    $
    46,631
    
    
    $
    47,012
    
    
    $
    220,014
    
    
    $
    220,032
       12




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##### Table of Contents



Credit Component of Other-Than-Temporary Impairment Losses For Whicha Portion Was Recognized in OtherComprehensive Income(In thousands)
    
    2009
    
    
    2008Balance, January 1
    
    $
    
    
    
    $
    Credit losses for which an
other-than-temporary impairment
was not previously recognized
in other comprehensive income
    
    
    (70
    )
    
    
    Balance, September 30
    
    $
    (70
    )
    
    $
    
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2009
    
    
    2009Net Income and Net Income Applicable toCommon SharesNet income
    
    $
    2,203
    
    
    $
    4,406Non-credit component of other-than-temporary impairment losses adjusted for previously recognized other-than-temporary losses, net of taxes
    
    
    (269
    )
    
    
    (269
    )Pro forma net income
    
    
    1,934
    
    
    
    4,137Preferred stock dividends
    
    
    (142
    )
    
    
    (892
    )Prepayment charges and accretion of preferred stock discount
    
    
    (1,282
    )
    
    
    (1,405
    )Pro forma net income applicable to common shares
    
    $
    510
    
    
    $
    1,840
  13




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##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Earnings Per Share - BasicEarnings per share  basic
    
    $
    0.17
    
    
    $
    0.46Per share effect of non-credit component of other-than-temporary impairment losses adjusted for previously recognized other-than-temporary losses, net of taxes
    
    
    (0.06
    )
    
    
    (0.06
    )Pro forma earnings per share  basic
    
    $
    0.11
    
    
    $
    0.40
 Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Earnings Per Share - DilutedEarnings per share  diluted
    
    $
    0.17
    
    
    $
    0.46Per share effect of non-credit component of other-than-temporary impairment losses adjusted for previously recognized other-than-temporary losses, net of taxes
    
    
    (0.06
    )
    
    
    (0.06
    )Pro forma earnings per share  diluted
    
    $
    0.11
    
    
    $
    0.40
   (6) Derivatives
   14




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##### Table of Contents



Asset Derivatives
    
    
    Liability DerivativesAs of
    
    
    As of
    
    
    
    
    
    
    As of
    
    
    As ofBalance
    
    
    September 30,
    
    
    December 31,
    
    
    Balance
    
    
    September 30,
    
    
    December 31,Sheet
    
    
    2009
    
    
    2008
    
    
    Sheet
    
    
    2009
    
    
    2008(In thousands)
    
    Location
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives not
designated as hedging
instrumentsInterest rate products
    
    Other assets
    
    $
    471
    
    
    $
    482
    
    
    Other liabilities
    
    $
    477
    
    
    $
    431Total derivatives not
designated as hedging
instruments
    
    
    
    
    
    $
    471
    
    
    $
    482
    
    
    
    
    
    
    $
    477
    
    
    $
    431
    15




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##### Table of Contents



Amount of Gain or (Loss) Recognized inIncome on Derivative (1)Location of Gain or (Loss)
    
    
    Three Months Ended September 30,Derivatives Not Designated as
    
    Recognized in Income onHedging Instruments
    
    Derivative
    
    
    2009
    
    
    2008(In thousands)Interest Rate Products
    
    Loan related fees
    
    $
    (63
    )
    
    $
    Total
    
    
    
    
    
    $
    (63
    )
    
    $
    
 (1)
    
    The amount of gain recognized in income represents net fee income and changes
related to the fair value of the interest rate products.  Amount of Gain or (Loss) Recognized inIncome on Derivative (1)Location of Gain or (Loss)
    
    
    Nine Months Ended September 30,Derivatives Not Designated as
    
    Recognized in Income onHedging Instruments
    
    Derivative
    
    
    2009
    
    
    2008(In thousands)Interest Rate Products
    
    Loan related fees
    
    $
    259
    
    
    $
    Total
    
    
    
    
    
    $
    259
    
    
    $
    
 (1)
    
    The amount of gain recognized in income represents net fee income and changes
related to the fair value of the interest rate products.     16




---



##### Table of Contents



(7) Fair Value of Financial Instruments
 Fair Value Measurements Effective Date of FASB Statement No. 157
       17




---



##### Table of Contents



Fair Value Measurements at September 30, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    81,395
    
    
    $
    
    
    
    $
    81,395
    
    
    $
    Trust preferred CDOs
    
    
    485
    
    
    
    
    
    
    
    485
    
    
    
    Collateralized mortgage obligations
    
    
    48,185
    
    
    
    
    
    
    
    48,185
    
    
    
    GSE mortgage-backed securities
    
    
    235,641
    
    
    
    
    
    
    
    235,641
    
    
    
    Total available for sale securities
    
    
    365,706
    
    
    
    
    
    
    
    365,706
    
    
    
    Interest rate swap assets
    
    
    471
    
    
    
    
    
    
    
    471
    
    
    
    Interest rate swap liabilities
    
    
    477
    
    
    
    
    
    
    
    477
    
    
    
    
 Fair Value Measurements at December 31, 2008 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)U.S. Treasury obligations
    
    $
    9,988
    
    
    $
    
    
    
    $
    9,988
    
    
    $
    GSE obligations
    
    
    47,387
    
    
    
    
    
    
    
    47,387
    
    
    
    Corporate debt securities
    
    
    1,987
    
    
    
    
    
    
    
    1,987
    
    
    
    Trust preferred CDOs
    
    
    1,480
    
    
    
    
    
    
    
    
    
    
    
    1,480Collateralized mortgage obligations
    
    
    60,750
    
    
    
    
    
    
    
    60,750
    
    
    
    GSE mortgage-backed securities
    
    
    204,814
    
    
    
    
    
    
    
    204,814
    
    
    
    Total available for sale securities
    
    
    326,406
    
    
    
    
    
    
    
    324,926
    
    
    
    1,480Interest rate swap assets
    
    
    482
    
    
    
    
    
    
    
    482
    
    
    
    Interest rate swap liabilities
    
    
    431
    
    
    
    
    
    
    
    431
    
    
    
    
   18




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##### Table of Contents



Note 6  Derivatives.
  19




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##### Table of Contents



Fair Value Measurements Using SignificantUnobservable Inputs(In thousands)
    
    2009
    
    
    2008Available for sale securitiesBalance, January 1
    
    $
    1,480
    
    
    $
    974Increase in unrealized holding losses
    
    
    (299
    )
    
    
    (538
    )Other-than-temporary impairment
    
    
    (696
    )
    
    
    (219
    )Transfers to Level 2
    
    
    (485
    )
    
    
    Transfers to Level 3
    
    
    
    
    
    
    1,642Balance, September 30
    
    $
    
    
    
    $
    1,859
 Fair Value Measurements Using SignificantUnobservable Inputs(In thousands)
    
    2009
    
    
    2008Restructured Loans and LeasesBalance, January 1
    
    $
    
    
    
    $
    Transfers to Level 3
    
    
    996
    
    
    
    Balance, September 30
    
    $
    996
    
    
    $
    
   Fair Value Measurements at September 30, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    3,199
    
    
    $
    
    
    
    $
    3,199
    
    
    $
    Restructured loans
    
    
    996
    
    
    
    
    
    
    
    
    
    
    
    996Other real estate owned
    
    
    2,083
    
    
    
    
    
    
    
    2,083
    
    
    
    
 Fair Value Measurements at September 30, 2008 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    3,308
    
    
    $
    
    
    
    $
    3,308
    
    
    $
    Other real estate owned
    
    
    352
    
    
    
    
    
    
    
    352
    
    
    
    
  20




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##### Table of Contents



Loans and leases receivable
 Stock in the Federal Home Loan Bank of Boston
 Deposits
  21




---



##### Table of Contents



Wholesale repurchase agreements
 Federal Home Loan Bank of Boston borrowings
 Subordinated deferrable interest debentures
 Financial instruments with off-balance sheet risk
  September 30, 2009
    
    
    December 31, 2008Book
    
    
    Estimated
    
    
    Book
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value(In thousands)Assets:Cash and due from banks
    
    $
    19,020
    
    
    $
    19,020
    
    
    $
    54,344
    
    
    $
    54,344Overnight investments
    
    
    523
    
    
    
    523
    
    
    
    1,113
    
    
    
    1,113Available for sale securities
    
    
    365,706
    
    
    
    365,706
    
    
    
    326,406
    
    
    
    326,406Stock in the FHLB
    
    
    16,274
    
    
    
    16,274
    
    
    
    15,671
    
    
    
    15,671Loans and leases receivable, net of
allowance for loan and lease losses:Commercial loans and leases
    
    
    711,154
    
    
    
    724,243
    
    
    
    646,814
    
    
    
    662,072Residential mortgage loans
    
    
    180,677
    
    
    
    184,090
    
    
    
    211,325
    
    
    
    208,669Consumer and other loans
    
    
    208,259
    
    
    
    207,509
    
    
    
    204,939
    
    
    
    199,252Interest rate swaps
    
    
    471
    
    
    
    471
    
    
    
    482
    
    
    
    482Accrued interest receivable
    
    
    4,826
    
    
    
    4,826
    
    
    
    5,240
    
    
    
    5,240Liabilities:Deposits:Demand deposit accounts
    
    $
    206,534
    
    
    $
    206,534
    
    
    $
    176,495
    
    
    $
    176,495NOW accounts
    
    
    62,333
    
    
    
    62,333
    
    
    
    56,703
    
    
    
    56,703Money market accounts
    
    
    50,380
    
    
    
    50,380
    
    
    
    4,445
    
    
    
    4,445Savings accounts
    
    
    365,857
    
    
    
    365,857
    
    
    
    381,106
    
    
    
    381,106Certificate of deposit accounts
    
    
    406,827
    
    
    
    410,157
    
    
    
    423,443
    
    
    
    427,571Overnight and short-term borrowings
    
    
    39,031
    
    
    
    39,031
    
    
    
    57,676
    
    
    
    57,676Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,559
    
    
    
    10,000
    
    
    
    11,075FHLB borrowings
    
    
    267,647
    
    
    
    294,137
    
    
    
    238,936
    
    
    
    266,723Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    15,156
    
    
    
    13,403
    
    
    
    15,262Interest rate swaps
    
    
    477
    
    
    
    477
    
    
    
    431
    
    
    
    431Accrued interest payable
    
    
    1,842
    
    
    
    1,842
    
    
    
    2,600
    
    
    
    2,600
  22




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##### Table of Contents



(8) Contingent Liabilities
  (9) U.S. Treasurys Capital Purchase Program
     23




---



##### Table of Contents



ITEM 2. Managements Discussion and Analysis
 General
 http://www.bankri.com SM
 Critical Accounting Policies
   Valuation of available for sale securities
    24




---



##### Table of Contents



Overview
  Rate/Volume Analysis Average Balances, Yields and Costs
 Interest Rate Risk
 Financial Condition  Asset Quality
   25




---



##### Table of Contents



26




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##### Table of Contents



Financial Condition  Executive Summary
  September 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,
    
    
    September 30,(In thousands)
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Total assets
    
    $
    1,569,880
    
    
    $
    1,584,482
    
    
    $
    1,548,863
    
    
    $
    1,528,974
    
    
    $
    1,489,980Loans and leases receivable
    
    
    1,116,627
    
    
    
    1,117,655
    
    
    
    1,105,298
    
    
    
    1,077,742
    
    
    
    1,060,739Available for sale securities
    
    
    365,706
    
    
    
    376,026
    
    
    
    356,681
    
    
    
    326,406
    
    
    
    333,431Goodwill
    
    
    12,051
    
    
    
    12,051
    
    
    
    12,051
    
    
    
    12,019
    
    
    
    12,019Core deposits (1)
    
    
    685,104
    
    
    
    681,834
    
    
    
    636,240
    
    
    
    618,749
    
    
    
    615,085Certificates of deposit
    
    
    406,827
    
    
    
    402,839
    
    
    
    419,621
    
    
    
    423,443
    
    
    
    407,069Borrowings
    
    
    340,081
    
    
    
    336,244
    
    
    
    320,517
    
    
    
    320,015
    
    
    
    338,862Common shareholders equity
    
    
    122,476
    
    
    
    120,471
    
    
    
    122,306
    
    
    
    121,010
    
    
    
    114,226Book value per common share
    
    
    26.57
    
    
    
    26.18
    
    
    
    26.57
    
    
    
    26.45
    
    
    
    24.97Tangible book value per common share
    
    
    23.96
    
    
    
    23.56
    
    
    
    23.95
    
    
    
    23.82
    
    
    
    22.34Tangible common equity ratio (2) (3)
    
    
    7.09
    %
    
    
    6.90
    %
    
    
    7.17
    %
    
    
    7.18
    %
    
    
    6.92
    %Core deposits to total deposits(1) (3)
    
    
    62.7
    %
    
    
    62.9
    %
    
    
    60.3
    %
    
    
    59.4
    %
    
    
    60.2
    %
 (1)
    
    Core deposits consist of demand deposit, NOW, money market and savings
accounts.(2)
    
    Calculated by dividing Common Shareholders Equity less Goodwill by Total
Assets less Goodwill.(3)
    
    Non-GAAP performance measure.    27




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##### Table of Contents



Financial Condition  Detailed Analysis
 Investments
        28




---



##### Table of Contents



Loans and Leases
  Commercial loans and leases 
   29




---



##### Table of Contents



Residential mortgage loans 
 Consumer loans 
  30




---



##### Table of Contents



September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)Commercial loans and leases:Commercial real estate  owner occupied
    
    $
    167,222
    
    
    $
    175,472Commercial and industrial
    
    
    183,911
    
    
    
    164,569Commercial real estate  nonowner occupied
    
    
    163,766
    
    
    
    133,782Small business
    
    
    55,442
    
    
    
    50,464Multi-family
    
    
    58,622
    
    
    
    53,159Construction
    
    
    23,630
    
    
    
    22,300Leases and other (a)
    
    
    78,506
    
    
    
    63,799Subtotal
    
    
    731,099
    
    
    
    663,545Unearned lease income
    
    
    (9,218
    )
    
    
    (6,980
    )Net deferred loan origination costs
    
    
    2,540
    
    
    
    1,857Total commercial loans and leases
    
    
    724,421
    
    
    
    658,422Residential mortgage loans:One- to four-family adjustable rate
    
    
    112,098
    
    
    
    126,689One- to four-family fixed rate
    
    
    69,702
    
    
    
    85,057Subtotal
    
    
    181,800
    
    
    
    211,746Premium on loans acquired
    
    
    528
    
    
    
    953Net deferred loan origination fees
    
    
    (25
    )
    
    
    (34
    )Total residential mortgage loans
    
    
    182,303
    
    
    
    212,665Consumer loans:Home equity  term loans
    
    
    123,662
    
    
    
    127,142Home equity  lines of credit
    
    
    83,404
    
    
    
    76,038Unsecured and other
    
    
    1,743
    
    
    
    2,216Subtotal
    
    
    208,809
    
    
    
    205,396Net deferred loan origination costs
    
    
    1,094
    
    
    
    1,259Total consumer loans
    
    
    209,903
    
    
    
    206,655Total loans and leases receivable
    
    $
    1,116,627
    
    
    $
    1,077,742
 (a)
    
    Included within commercial loans and leases were leases held for sale of $156,000 at December
31, 2008. There were no leases held for sale at September 30, 2009. Deposits
   September 30, 2009
    
    
    December 31, 2008Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    WeightedOf
    
    
    Average
    
    
    
    
    
    
    of
    
    
    AverageAmount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate(In thousands)NOW accounts
    
    $
    62,333
    
    
    
    5.7
    %
    
    
    0.08
    %
    
    $
    56,703
    
    
    
    5.5
    %
    
    
    0.10
    %Money market accounts
    
    
    50,380
    
    
    
    4.6
    %
    
    
    1.26
    %
    
    
    4,445
    
    
    
    0.4
    %
    
    
    0.39
    %Savings accounts
    
    
    365,857
    
    
    
    33.5
    %
    
    
    0.77
    %
    
    
    381,106
    
    
    
    36.6
    %
    
    
    1.46
    %Certificate of deposit accounts
    
    
    406,827
    
    
    
    37.3
    %
    
    
    2.12
    %
    
    
    423,443
    
    
    
    40.6
    %
    
    
    3.29
    %Total interest bearing deposits
    
    
    885,397
    
    
    
    81.1
    %
    
    
    1.37
    %
    
    
    865,697
    
    
    
    83.1
    %
    
    
    2.26
    %Noninterest bearing accounts
    
    
    206,534
    
    
    
    18.9
    %
    
    
    0.00
    %
    
    
    176,495
    
    
    
    16.9
    %
    
    
    0.00
    %Total deposits
    
    $
    1,091,931
    
    
    
    100.0
    %
    
    
    1.11
    %
    
    $
    1,042,192
    
    
    
    100.0
    %
    
    
    1.89
    %
  31




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##### Table of Contents



Borrowings
   Asset Quality
  Nonperforming assets 
  September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)Loans and leases accounted for on a nonaccrual basis
    
    $
    13,965
    
    
    $
    14,045Loans and leases past due 90 days or more, but still accruing
    
    
    275
    
    
    
    324Restructured loans and leases on a nonaccrual basis
    
    
    659
    
    
    
    Total nonperforming loans and leases
    
    
    14,899
    
    
    
    14,369Other real estate owned
    
    
    1,995
    
    
    
    863Total nonperforming assets
    
    $
    16,894
    
    
    $
    15,232Delinquent loans and leases 60-89 days past due
    
    $
    1,384
    
    
    $
    3,782Restructured loans and leases not included in nonperforming assets
    
    $
    446
    
    
    $
    32Nonperforming loans and leases as a percent of total loans and leases
    
    
    1.33
    %
    
    
    1.33
    %Nonperforming assets as a percent of total assets
    
    
    1.08
    %
    
    
    1.00
    %Delinquent loans and leases 60-89 days past due as a percent of
total loans and leases
    
    
    0.12
    %
    
    
    0.35
    %
  32




---



##### Table of Contents



September 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Commercial Real Estate Nonperforming Loans
    
    $
    3,159
    
    
    $
    4,884Commercial and Industrial Nonperforming Loans
    
    
    3,263
    
    
    
    2,802Small Business Nonperforming Loans
    
    
    585
    
    
    
    892Multifamily Nonperforming Loans
    
    
    205
    
    
    
    Construction Nonperforming Loans
    
    
    469
    
    
    
    1,000Nonperforming Leases
    
    
    1,059
    
    
    
    428Residential Nonperforming Loans
    
    
    5,175
    
    
    
    4,314Consumer Nonperforming Loans
    
    
    984
    
    
    
    49Total Nonperforming Loans and Leases
    
    $
    14,899
    
    
    $
    14,369
  Higher-Risk Loans -
 Adversely classified assets
   33




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##### Table of Contents



Allowance for Loan and Lease Losses
   Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008(In thousands)Balance at beginning of period
    
    $
    14,664
    
    
    $
    12,619Loans and leases charged-off:Commercial real estate loans
    
    
    (50
    )
    
    
    (174
    )Commercial and industrial loans
    
    
    (1,770
    )
    
    
    Small business loans
    
    
    (864
    )
    
    
    (100
    )Leases
    
    
    (67
    )
    
    
    (29
    )Residential mortgage loans
    
    
    (1,486
    )
    
    
    (908
    )Consumer and other loans
    
    
    (59
    )
    
    
    (67
    )Total loans charged-off
    
    
    (4,296
    )
    
    
    (1,278
    )Recoveries of loans and leases previously charged-off:Commercial and industrial loans
    
    
    13
    
    
    
    31Small business loans
    
    
    11
    
    
    
    20Leases
    
    
    4
    
    
    
    16Residential mortgage loans
    
    
    2
    
    
    
    Consumer and other loans
    
    
    29
    
    
    
    21Total recoveries of loans previously charged-off
    
    
    59
    
    
    
    88Net charge-offs
    
    
    (4,237
    )
    
    
    (1,190
    )Provision for loan and lease losses charged against income
    
    
    6,110
    
    
    
    2,770Balance at end of period
    
    $
    16,537
    
    
    $
    14,199
  34




---



##### Table of Contents



September 30, 2009
    
    
    December 31, 2008(In thousands)Loan categoryCommercial loans and leases
    
    $
    12,245
    
    
    $
    10,708Residential mortgage loans
    
    
    1,501
    
    
    
    1,239Consumer and other loans
    
    
    1,516
    
    
    
    1,609Unallocated
    
    
    1,275
    
    
    
    1,108Total
    
    $
    16,537
    
    
    $
    14,664
    35




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##### Table of Contents



Results of Operations  Executive Overview
  For the three-month periods endedSeptember 30,
    
    
    June 30,
    
    
    March 31,
    
    
    December 31,
    
    
    September 30,(In thousands, except per share data)
    
    2009
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2008Income statement data:Net interest income
    
    $
    12,666
    
    
    $
    11,573
    
    
    $
    11,082
    
    
    $
    11,715
    
    
    $
    11,921Noninterest income
    
    
    2,241
    
    
    
    2,214
    
    
    
    2,357
    
    
    
    2,881
    
    
    
    2,333Noninterest expense
    
    
    9,812
    
    
    
    10,145
    
    
    
    9,623
    
    
    
    9,510
    
    
    
    9,304Net income
    
    
    2,203
    
    
    
    740
    
    
    
    1,463
    
    
    
    2,253
    
    
    
    2,324Net income applicable to common shares
    
    
    779
    
    
    
    303
    
    
    
    1,027
    
    
    
    2,195
    
    
    
    2,324Per share data:Diluted earnings per share
    
    $
    0.17
    
    
    $
    0.07
    
    
    $
    0.22
    
    
    $
    0.48
    
    
    $
    0.50Dividends per common share
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17Operating ratios:Net interest margin (1) (5)
    
    
    3.38
    %
    
    
    3.10
    %
    
    
    3.08
    %
    
    
    3.29
    %
    
    
    3.34
    %Return on assets (2) (5)
    
    
    0.56
    %
    
    
    0.19
    %
    
    
    0.39
    %
    
    
    0.59
    %
    
    
    0.62
    %Return on equity (3) (5)
    
    
    2.54
    %
    
    
    1.00
    %
    
    
    4.88
    %
    
    
    5.09
    %
    
    
    8.20
    %Efficiency ratio (4) (5)
    
    
    65.82
    %
    
    
    73.58
    %
    
    
    71.60
    %
    
    
    65.15
    %
    
    
    65.27
    %
 (1)
    
    Calculated by dividing annualized Net Interest Income by Average
Interest-Earning Assets.(2)
    
    Calculated by dividing annualized Net Income by Average Total Assets.(3)
    
    Calculated by dividing annualized Net Income Applicable to Common Shares
by Average Common Shareholders Equity.(4)
    
    Calculated by dividing Noninterest Expense by Net Interest Income plus
Noninterest Income.(5)
    
    Non-GAAP performance measure.      36




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##### Table of Contents



Results of Operations  Comparison of the Three Months Ended September 30, 2009 and 2008
 Net Interest Income
   37




---



##### Table of Contents



Average Balances, Yields and Costs
 For the three months ended September 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    851
    
    
    $
    1
    
    
    
    0.06
    %
    
    $
    1,005
    
    
    $
    6
    
    
    
    2.13
    %Available for sale securities
    
    
    360,586
    
    
    
    3,876
    
    
    
    4.26
    %
    
    
    346,930
    
    
    
    4,261
    
    
    
    4.89
    %Stock in the FHLB
    
    
    16,024
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    119
    
    
    
    3.02
    %Loans and leases receivable:Commercial loans and leases
    
    
    718,175
    
    
    
    10,437
    
    
    
    5.78
    %
    
    
    634,541
    
    
    
    10,076
    
    
    
    6.32
    %Residential mortgage loans
    
    
    187,041
    
    
    
    2,302
    
    
    
    4.92
    %
    
    
    219,265
    
    
    
    2,899
    
    
    
    5.29
    %Consumer and other loans
    
    
    212,109
    
    
    
    2,384
    
    
    
    4.46
    %
    
    
    206,381
    
    
    
    2,776
    
    
    
    5.35
    %Total earning assets
    
    
    1,494,786
    
    
    
    19,000
    
    
    
    5.06
    %
    
    
    1,423,793
    
    
    
    20,137
    
    
    
    5.64
    %Cash and due from banks
    
    
    16,828
    
    
    
    
    
    
    
    
    
    
    
    20,813Allowance for loan and lease losses
    
    
    (17,088
    )
    
    
    
    
    
    
    
    
    
    
    (13,456
    )Premises and equipment
    
    
    12,604
    
    
    
    
    
    
    
    
    
    
    
    13,057Goodwill, net
    
    
    12,051
    
    
    
    
    
    
    
    
    
    
    
    12,019Accrued interest receivable
    
    
    4,355
    
    
    
    
    
    
    
    
    
    
    
    4,965Bank-owned life insurance
    
    
    29,465
    
    
    
    
    
    
    
    
    
    
    
    24,794Prepaid expenses and other assets
    
    
    9,865
    
    
    
    
    
    
    
    
    
    
    
    8,907Total assets
    
    $
    1,562,866
    
    
    
    
    
    
    
    
    
    
    $
    1,494,892Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    65,365
    
    
    $
    13
    
    
    
    0.08
    %
    
    $
    60,800
    
    
    $
    33
    
    
    
    0.22
    %Money market accounts
    
    
    43,543
    
    
    
    140
    
    
    
    1.27
    %
    
    
    5,400
    
    
    
    17
    
    
    
    1.22
    %Savings accounts
    
    
    369,019
    
    
    
    707
    
    
    
    0.76
    %
    
    
    383,211
    
    
    
    1,510
    
    
    
    1.57
    %Certificate of deposit accounts
    
    
    398,923
    
    
    
    2,448
    
    
    
    2.43
    %
    
    
    389,601
    
    
    
    3,213
    
    
    
    3.28
    %Overnight and short-term borrowings
    
    
    41,566
    
    
    
    19
    
    
    
    0.19
    %
    
    
    52,493
    
    
    
    209
    
    
    
    1.58
    %Wholesale repurchase agreements
    
    
    15,326
    
    
    
    141
    
    
    
    3.63
    %
    
    
    10,000
    
    
    
    136
    
    
    
    5.32
    %FHLB borrowings
    
    
    276,722
    
    
    
    2,691
    
    
    
    3.81
    %
    
    
    270,952
    
    
    
    2,864
    
    
    
    4.20
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    175
    
    
    
    5.18
    %
    
    
    13,403
    
    
    
    234
    
    
    
    6.97
    %Total interest-bearing liabilities
    
    
    1,223,867
    
    
    
    6,334
    
    
    
    2.05
    %
    
    
    1,185,860
    
    
    
    8,216
    
    
    
    2.76
    %Noninterest-bearing deposits
    
    
    197,313
    
    
    
    
    
    
    
    
    
    
    
    176,491Other liabilities
    
    
    5,866
    
    
    
    
    
    
    
    
    
    
    
    19,835Total liabilities
    
    
    1,427,046
    
    
    
    
    
    
    
    
    
    
    
    1,382,186Shareholders equity:
    
    
    135,820
    
    
    
    
    
    
    
    
    
    
    
    112,706Total liabilities and shareholders equity
    
    $
    1,562,866
    
    
    
    
    
    
    
    
    
    
    $
    1,494,892Net interest income
    
    
    
    
    
    $
    12,666
    
    
    
    
    
    
    
    
    
    
    $
    11,921Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.01
    %
    
    
    
    
    
    
    
    
    
    
    2.88
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.38
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %
  38




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##### Table of Contents



Rate/Volume Analysis 
 Three Months Ended September 30,2009 vs. 2008Increase/(Decrease) Due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Overnight investments
    
    $
    (4
    )
    
    $
    (1
    )
    
    $
    (5
    )Available for sale securities
    
    
    (483
    )
    
    
    98
    
    
    
    (385
    )Stock in the FHLB
    
    
    (122
    )
    
    
    3
    
    
    
    (119
    )Commercial loans and leases
    
    
    (1,156
    )
    
    
    1,517
    
    
    
    361Residential mortgage loans
    
    
    (196
    )
    
    
    (401
    )
    
    
    (597
    )Consumer and other loans
    
    
    (391
    )
    
    
    (1
    )
    
    
    (392
    )Total interest income
    
    
    (2,352
    )
    
    
    1,215
    
    
    
    (1,137
    )Interest expense:NOW accounts
    
    
    (22
    )
    
    
    2
    
    
    
    (20
    )Money market accounts
    
    
    1
    
    
    
    122
    
    
    
    123Savings accounts
    
    
    (749
    )
    
    
    (54
    )
    
    
    (803
    )Certificate of deposit accounts
    
    
    (840
    )
    
    
    75
    
    
    
    (765
    )Overnight and short-term borrowings
    
    
    (153
    )
    
    
    (36
    )
    
    
    (189
    )Wholesales repurchase agreements
    
    
    (52
    )
    
    
    56
    
    
    
    4FHLB borrowings
    
    
    (240
    )
    
    
    67
    
    
    
    (173
    )Subordinated deferrable interest debentures
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Total interest expense
    
    
    (2,114
    )
    
    
    232
    
    
    
    (1,882
    )Net interest income
    
    $
    (238
    )
    
    $
    983
    
    
    $
    745
 Interest Income  Investments 
  Interest Income  Loans and Leases
   39




---



##### Table of Contents



Interest Expense - Deposits and Borrowings -
     Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
  Noninterest Expense
   40




---



##### Table of Contents



Income Tax Expense
   Results of Operations  Comparison of the Nine Months Ended September 30, 2009 and 2008
 General
  Net Interest Income
   41




---



##### Table of Contents



Average Balances, Yields and Costs
 Nine Months Ended September 30,2009
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    1,607
    
    
    $
    10
    
    
    
    0.80
    %
    
    $
    10,971
    
    
    $
    261
    
    
    
    3.17
    %Available for sale securities
    
    
    358,019
    
    
    
    11,626
    
    
    
    4.34
    %
    
    
    336,813
    
    
    
    12,408
    
    
    
    4.92
    %Stock in the FHLB
    
    
    15,790
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    512
    
    
    
    4.36
    %Loans and
leases receivable:Commercial loans and leases
    
    
    695,368
    
    
    
    30,184
    
    
    
    5.80
    %
    
    
    605,435
    
    
    
    29,624
    
    
    
    6.53
    %Residential mortgage loans
    
    
    197,588
    
    
    
    7,422
    
    
    
    5.01
    %
    
    
    230,689
    
    
    
    9,232
    
    
    
    5.34
    %Consumer and other loans
    
    
    211,613
    
    
    
    7,110
    
    
    
    4.49
    %
    
    
    209,608
    
    
    
    8,613
    
    
    
    5.49
    %Total earning assets
    
    
    1,479,985
    
    
    
    56,352
    
    
    
    5.08
    %
    
    
    1,409,187
    
    
    
    60,650
    
    
    
    5.74
    %Cash and due from banks
    
    
    19,122
    
    
    
    
    
    
    
    
    
    
    
    22,395Allowance for loan and lease losses
    
    
    (15,852
    )
    
    
    
    
    
    
    
    
    
    
    (12,976
    )Premises and equipment
    
    
    12,528
    
    
    
    
    
    
    
    
    
    
    
    13,311Goodwill, net
    
    
    12,056
    
    
    
    
    
    
    
    
    
    
    
    11,969Accrued interest receivable
    
    
    4,286
    
    
    
    
    
    
    
    
    
    
    
    4,982Bank-owned life insurance
    
    
    29,164
    
    
    
    
    
    
    
    
    
    
    
    24,536Prepaid expenses and other assets
    
    
    9,787
    
    
    
    
    
    
    
    
    
    
    
    7,733Total assets
    
    $
    1,551,076
    
    
    
    
    
    
    
    
    
    
    $
    1,481,137Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    64,576
    
    
    $
    45
    
    
    
    0.09
    %
    
    $
    60,970
    
    
    $
    138
    
    
    
    0.30
    %Money market accounts
    
    
    21,602
    
    
    
    192
    
    
    
    1.19
    %
    
    
    5,632
    
    
    
    65
    
    
    
    1.53
    %Savings accounts
    
    
    380,308
    
    
    
    2,720
    
    
    
    0.96
    %
    
    
    394,435
    
    
    
    5,688
    
    
    
    1.93
    %Certificate of deposit accounts
    
    
    414,011
    
    
    
    9,069
    
    
    
    2.93
    %
    
    
    381,522
    
    
    
    10,905
    
    
    
    3.82
    %Overnight and short-term borrowings
    
    
    46,253
    
    
    
    67
    
    
    
    0.20
    %
    
    
    55,586
    
    
    
    853
    
    
    
    2.05
    %Wholesale repurchase agreements
    
    
    11,795
    
    
    
    408
    
    
    
    4.62
    %
    
    
    10,000
    
    
    
    404
    
    
    
    5.32
    %FHLB borrowings
    
    
    258,189
    
    
    
    7,966
    
    
    
    4.07
    %
    
    
    253,420
    
    
    
    8,234
    
    
    
    4.34
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    564
    
    
    
    5.61
    %
    
    
    13,403
    
    
    
    710
    
    
    
    7.07
    %Total interest-bearing liabilities
    
    
    1,210,137
    
    
    
    21,031
    
    
    
    2.32
    %
    
    
    1,174,968
    
    
    
    26,997
    
    
    
    3.07
    %Noninterest-bearing deposits
    
    
    184,747
    
    
    
    
    
    
    
    
    
    
    
    175,749Other liabilities
    
    
    11,539
    
    
    
    
    
    
    
    
    
    
    
    17,013Total liabilities
    
    
    1,406,423
    
    
    
    
    
    
    
    
    
    
    
    1,367,730Shareholders Equity:
    
    
    144,653
    
    
    
    
    
    
    
    
    
    
    
    113,407Total liabilities and shareholders equity
    
    $
    1,551,076
    
    
    
    
    
    
    
    
    
    
    $
    1,481,137Net interest income
    
    
    
    
    
    $
    35,321
    
    
    
    
    
    
    
    
    
    
    $
    33,653Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.76
    %
    
    
    
    
    
    
    
    
    
    
    2.68
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    3.19
    %
  42




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##### Table of Contents



Rate/Volume Analysis 
 Nine Months Ended September 30,2009 vs. 2008Increase/(decrease) due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Overnight investments
    
    $
    (117
    )
    
    $
    (134
    )
    
    $
    (251
    )Available for sale securities
    
    
    (1,230
    )
    
    
    448
    
    
    
    (782
    )Stock in the FHLB
    
    
    (516
    )
    
    
    4
    
    
    
    (512
    )Commercial loans and leases
    
    
    (4,293
    )
    
    
    4,853
    
    
    
    560Residential mortgage loans
    
    
    (554
    )
    
    
    (1,256
    )
    
    
    (1,810
    )Consumer and other loans
    
    
    (1,342
    )
    
    
    (161
    )
    
    
    (1,503
    )Total interest income
    
    
    (8,052
    )
    
    
    3,754
    
    
    
    (4,298
    )Interest expense:NOW accounts
    
    
    (100
    )
    
    
    7
    
    
    
    (93
    )Money market accounts
    
    
    (17
    )
    
    
    144
    
    
    
    127Savings accounts
    
    
    (2,770
    )
    
    
    (198
    )
    
    
    (2,968
    )Certificate of deposit accounts
    
    
    (2,696
    )
    
    
    860
    
    
    
    (1,836
    )Overnight and short-term borrowings
    
    
    (662
    )
    
    
    (124
    )
    
    
    (786
    )Wholesale repurchase agreements
    
    
    (58
    )
    
    
    62
    
    
    
    4FHLB borrowings
    
    
    (440
    )
    
    
    172
    
    
    
    (268
    )Subordinated deferrable interest debentures
    
    
    (146
    )
    
    
    
    
    
    
    (146
    )Total interest expense
    
    
    (6,889
    )
    
    
    923
    
    
    
    (5,966
    )Net interest income
    
    $
    (1,163
    )
    
    $
    2,831
    
    
    $
    1,668
 Interest Income - Investments -
  Interest Income - Loans and Leases
   43




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##### Table of Contents



Interest Expense - Deposits and Borrowings -
    Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
   44




---



##### Table of Contents



Noninterest Expense
     Income Tax Expense
  Liquidity and Capital Resources
 Liquidity
     45




---



##### Table of Contents



Capital Resources
      Minimum Required
    
    
    Minimum RequiredFor Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)At September 30, 2009:Bancorp
Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    120,467
    
    
    
    7.80
    %
    
    $
    61,785
    
    
    
    4.00
    %
    
    $
    77,232
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    120,467
    
    
    
    10.82
    %
    
    
    44,538
    
    
    
    4.00
    %
    
    
    66,807
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    134,413
    
    
    
    12.07
    %
    
    
    89,076
    
    
    
    8.00
    %
    
    
    111,345
    
    
    
    10.00
    %Bank
Rhode IslandTier I capital (to average assets)
    
    $
    118,662
    
    
    
    7.64
    %
    
    $
    62,111
    
    
    
    4.00
    %
    
    $
    77,639
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    118,662
    
    
    
    10.66
    %
    
    
    44,509
    
    
    
    4.00
    %
    
    
    66,763
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    132,608
    
    
    
    11.92
    %
    
    
    89,017
    
    
    
    8.00
    %
    
    
    111,271
    
    
    
    10.00
    %At December 31, 2008:Bancorp
Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    150,169
    
    
    
    10.04
    %
    
    $
    59,837
    
    
    
    4.00
    %
    
    $
    74,796
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    150,169
    
    
    
    14.23
    %
    
    
    42,202
    
    
    
    4.00
    %
    
    
    63,302
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    163,368
    
    
    
    15.48
    %
    
    
    84,403
    
    
    
    8.00
    %
    
    
    105,504
    
    
    
    10.00
    %Bank
Rhode IslandTier I capital (to average assets)
    
    $
    118,197
    
    
    
    7.92
    %
    
    $
    59,669
    
    
    
    4.00
    %
    
    $
    74,586
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    118,197
    
    
    
    11.21
    %
    
    
    42,180
    
    
    
    4.00
    %
    
    
    63,269
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    131,396
    
    
    
    12.46
    %
    
    
    84,359
    
    
    
    8.00
    %
    
    
    105,449
    
    
    
    10.00
    %
  46




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Earnings per share  diluted
    
    $
    0.17
    
    
    $
    0.50
    
    
    $
    0.46
    
    
    $
    1.49Effect of preferred shares dividend
    
    
    0.03
    
    
    
    
    
    
    
    0.19
    
    
    
    Effect of preferred shares discount
    
    
    0.28
    
    
    
    
    
    
    
    0.30
    
    
    
    Non-GAAP earnings per common share  diluted
    
    $
    0.48
    
    
    $
    0.50
    
    
    $
    0.95
    
    
    $
    1.49
   Recent Accounting Pronouncements
 Note 4 - Recent Accounting Pronouncements
  47




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
     Estimated Exposureto Net Interest IncomeDollar
    
    
    PercentChange
    
    
    Change(Dollars in thousands)Initial Twelve Month Period:Up 200 bps
    
    $
    (315
    )
    
    
    0.6
    %Down 200 bps
    
    
    (3,568
    )
    
    
    (6.8
    %)
  Asset and Liability
Management
  48




---



##### Table of Contents



ITEM 4. Controls and Procedures
    49




---



##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of the Security Holders
  
 Item 5. Other Information
   50




---



##### Table of Contents



Item 6. Exhibits
 10.6(b)
    
    Amendment No. 2 to Amended and Restated Supplemental Executive Retirement
Plan12.1
    
    Computation of Ratios of Earnings to Fixed Charges12.2
    
    Computation of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends31.1
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
  51




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
   Bancorp Rhode Island, Inc.November 4, 2009(Date)
    
    /s/ Merrill W. Sherman

Merrill W. ShermanPresident and Chief Executive OfficerNovember 4, 2009(Date)
    
    /s/ Linda H. Simmons

Linda H. SimmonsChief Financial Officer and Treasurer
  52




---



##### Table of Contents



Exhibit Number

    Description10.6
    (b)

    Amendment No. 2 to Amended and Restated Supplemental Executive Retirement
Plan12.1
    

    Computation of Ratios of Earnings to Fixed Charges12.2
    

    Computation of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends31.1
    

    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    

    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    

    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.3
    

    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
  53